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The AA said the move affected 7.3 million car insurance policies and that without the tax hike, prices would have increased by less than 7 per cent. But it warned the cost of insuring drivers had also risen because of personal injury claims.

It estimated false and exaggerated claims for whiplash and other injuries added about £50 a year to every policy.

Tax hike: The rise, which is the biggest quarterly increase since 2010, came as insurers upped their prices following George Osborne’s move to increase tax paid on premiums from 6 to 9.5 per cent

Research by AA Insurance last year suggested one in ten drivers thought it was acceptable to make an insurance claim for an injury following a collision, even if no injury was suffered.

Michael Lloyd, director of AA Insurance, said he expected premiums to continue to rise this year but not at the same ‘exceptional rate’. He added that new legislation to tackle whiplash claims should help to lower premiums.

‘The UK suffers the unenviable reputation for being the “whiplash capital of Europe” with the number of claims continuing to pile in, encouraged by vigorous cold-calling claims firms,’ he said.

‘It’s this acceptance that it’s OK to defraud insurers that has become endemic.

‘It is stealing and it affects the premiums paid by your friends, your family and your colleagues – those that most wouldn’t dream of defrauding.

‘The sooner new legislation to tackle whiplash claims becomes enshrined in law, the sooner that will be reflected in the premiums quoted for car insurance.’ Older drivers have been particularly hit by the premium rises, a study published last month found.

Motorists aged 50 and over saw the cost of their annual car insurance rise by an average of 16.4 per cent, compared to 10.9 per cent for all drivers and 1.5 per cent for younger drivers, according to the Consumer Intelligence Motor Insurance Index.

Insurance experts said it meant older people were ultimately subsidising smaller increases for younger drivers.

November’s increase in the insurance premium tax has been predicted to raise nearly £1.5 billion for the Treasury.